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Revenue
 9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue

NOTE 4. REVENUE

The core principle of the revenue recognition model is that an entity should identify the various performance obligations in a contract, allocate the transaction price among the performance obligations and recognize revenue when (or as) the entity satisfies each performance obligation.

Utility Revenues

Revenue from Contracts with Customers

General

The majority of Avista Corp.’s revenue is from rate-regulated sales of electricity and natural gas to retail customers, which has two performance obligations, (1) having service available for a specified period (typically a month at a time) and (2) the delivery of energy to customers. The total energy price generally has a fixed component (basic charge) related to having service available and a usage-based component, related to the delivery and consumption of energy. The commodity is sold and/or delivered to and consumed by the customer simultaneously, and the provisions of the relevant utility commission authorization determine the charges the Company may bill the customer. Since all revenue recognition criteria are met upon the delivery of energy to customers, revenue is recognized immediately.

Revenues from contracts with customers are presented in the Condensed Consolidated Statements of Income in the line item "Utility revenues, exclusive of alternative revenue programs."

Non-Derivative Wholesale Contracts

The Company has certain wholesale contracts that are not accounted for as derivatives and are considered revenue from contracts with customers. Revenue is recognized as energy is delivered to the customer or the service is available for a specified period of time, consistent with the discussion of rate-regulated sales above.

Alternative Revenue Programs (Decoupling)

Alternative revenue programs are contracts between an entity and a regulator of utilities, not a contract between an entity and a customer. GAAP requires the presentation of revenue arising from alternative revenue programs separately from revenues arising from contracts with customers on the Condensed Consolidated Statements of Income. The Company's decoupling mechanisms (also known as a FCA in Idaho) qualify as alternative revenue programs. Decoupling revenue deferrals are recognized in the Condensed Consolidated Statements of Income during the period they occur (i.e. during the period of revenue shortfall or excess due to fluctuations in customer usage), subject to certain limitations, and a regulatory asset or liability is established which will be surcharged or rebated to customers in future periods. GAAP requires that for an alternative revenue program, like decoupling, the revenue must be expected to be collected from customers within 24 months of the deferral to qualify for recognition in the Condensed Consolidated Statements of Income. Amounts included in the Company's decoupling program that are not expected to be collected from customers within 24 months are not recorded in the financial statements until the period in which revenue recognition criteria are met. The amounts expected to be collected from customers within 24 months represents an estimate made by the Company on an ongoing basis due to it being based on the volumes of electric and natural gas sold to customers on a go-forward basis.

The Company records alternative program revenues under the gross method, which is to amortize the decoupling regulatory asset/liability to the alternative revenue program line item on the Condensed Consolidated Statements of Income as it is collected from or refunded to customers. The cash passing between the Company and the customers is presented in revenue from contracts with customers since it is a portion of the overall tariff paid by customers. This method results in a gross-up to both revenue from contracts with customers and revenue from alternative revenue programs, but has a net zero impact on total revenue. Depending on whether the previous deferral balance being amortized was a regulatory asset or regulatory liability, and depending on the size and direction of the current year deferral of surcharges and/or rebates to customers, it could result in negative alternative revenue program revenue during the year.

Derivative Revenue

Most wholesale electric and natural gas transactions (including both physical and financial transactions), and the sale of fuel are considered derivatives, which are disclosed separately from revenue from contracts with customers. Revenue is recognized for these items upon the settlement/expiration of the derivative contract. Derivative revenue includes transactions entered into and settled within the same month.

Other Utility Revenue

Other utility revenue includes rent, sales of materials, late fees and other charges that do not represent contracts with customers. This revenue is excluded from revenue from contracts with customers, as this revenue does not represent items where a customer contracted with the Company to obtain goods or services that are an output of the Company’s ordinary activities in exchange for consideration. As such, these revenues are presented separately from revenue from contracts with customers.

Other Considerations for Utility Revenues

Gross Versus Net Presentation

Revenues and resource costs from Avista Utilities’ settled energy contracts “booked out” (not physically delivered) are reported on a net basis as part of derivative revenues.

Utility-related taxes collected from customers (primarily state excise taxes and city utility taxes) are imposed on Avista Utilities as opposed to being imposed on customers; therefore, Avista Utilities is the taxpayer and records these transactions on a gross basis in revenue from contracts with customers and operating expense (taxes other than income taxes). The utility-related taxes collected from customers at AEL&P are imposed on the customers rather than AEL&P; therefore, the customers are the taxpayers and AEL&P is acting as their agent. As such, these transactions at AEL&P are presented on a net basis within revenue from contracts with customers.

Utility-related taxes included in revenue from contracts with customers were as follows for the three and nine months ended September 30 (dollars in thousands):

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Utility-related taxes

$

16,775

 

 

$

14,484

 

 

$

60,442

 

 

$

56,356

 

Significant Judgments and Unsatisfied Performance Obligations

The only significant judgments involving revenue recognition are estimates surrounding unbilled revenue and receivables from contracts with customers and estimates surrounding the amount of decoupling revenues that will be collected from customers within 24 months (discussed above).

The Company has certain capacity arrangements, where the Company has a contractual obligation to provide either electric or natural gas capacity to its customers for a fixed fee. Most of these arrangements are paid for in arrears by the customers and do not result in deferred revenue and only result in receivables from the customers. The Company has one capacity agreement where the customer makes payments throughout the year. As of September 30, 2024, the Company estimates it had unsatisfied capacity performance obligations of $3.0 million, which will be recognized as revenue in future periods as the capacity is provided to the customers. These performance obligations are not reflected in the financial statements, as the Company has not received payment for these services.

Disaggregation of Total Operating Revenue

The following table disaggregates total operating revenue by segment and source for the three and nine months ended September 30 (dollars in thousands):

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Avista Utilities

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from contracts with customers

 

$

318,171

 

 

$

285,821

 

 

$

1,136,926

 

 

$

1,058,725

 

Derivative revenues

 

 

56,462

 

 

 

77,562

 

 

 

194,647

 

 

 

141,080

 

Alternative revenue programs

 

 

3,978

 

 

 

3,578

 

 

 

23,032

 

 

 

(9,947

)

Other utility revenues

 

 

5,135

 

 

 

2,712

 

 

 

14,891

 

 

 

8,561

 

Total Avista Utilities

 

 

383,746

 

 

 

369,673

 

 

 

1,369,496

 

 

 

1,198,419

 

AEL&P

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from contracts with customers

 

 

9,826

 

 

 

9,700

 

 

 

35,163

 

 

 

34,934

 

Deferrals and amortizations for rate refunds to customers

 

 

(183

)

 

 

—

 

 

 

(183

)

 

 

—

 

Other utility revenues

 

 

176

 

 

 

151

 

 

 

515

 

 

 

474

 

Total AEL&P

 

 

9,819

 

 

 

9,851

 

 

 

35,495

 

 

 

35,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-utility revenues

 

 

177

 

 

 

102

 

 

 

239

 

 

 

367

 

Total operating revenues

 

$

393,742

 

 

$

379,626

 

 

$

1,405,230

 

 

$

1,234,194

 

Utility Revenue from Contracts with Customers by Type and Service

The following table disaggregates revenue from contracts with customers associated with the Company's electric operations for the three and nine months ended September 30 (dollars in thousands):

 

 

2024

 

 

2023

 

 

 

Avista
Utilities

 

 

AEL&P

 

 

Total Utility

 

 

Avista
Utilities

 

 

AEL&P

 

 

Total Utility

 

Three months ended September 30:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ELECTRIC OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from contracts with customers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

110,328

 

 

$

3,444

 

 

$

113,772

 

 

$

95,881

 

 

$

3,186

 

 

$

99,067

 

Commercial

 

 

97,389

 

 

 

6,313

 

 

 

103,702

 

 

 

89,772

 

 

 

6,447

 

 

 

96,219

 

Industrial

 

 

36,910

 

 

 

—

 

 

 

36,910

 

 

 

29,584

 

 

 

—

 

 

 

29,584

 

Public street and highway lighting

 

 

2,186

 

 

 

69

 

 

 

2,255

 

 

 

2,005

 

 

 

67

 

 

 

2,072

 

Total retail revenue

 

 

246,813

 

 

 

9,826

 

 

 

256,639

 

 

 

217,242

 

 

 

9,700

 

 

 

226,942

 

Transmission

 

 

9,250

 

 

 

—

 

 

 

9,250

 

 

 

7,721

 

 

 

—

 

 

 

7,721

 

Other revenue from contracts with
   customers

 

 

8,062

 

 

 

—

 

 

 

8,062

 

 

 

9,353

 

 

 

—

 

 

 

9,353

 

Total electric revenue from contracts
 with customers

 

$

264,125

 

 

$

9,826

 

 

$

273,951

 

 

$

234,316

 

 

$

9,700

 

 

$

244,016

 

Nine months ended September 30:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ELECTRIC OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from contracts with customers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

345,166

 

 

$

15,146

 

 

$

360,312

 

 

$

305,203

 

 

$

14,485

 

 

$

319,688

 

Commercial

 

 

275,525

 

 

 

19,819

 

 

 

295,344

 

 

 

252,344

 

 

 

20,257

 

 

 

272,601

 

Industrial

 

 

95,014

 

 

 

—

 

 

 

95,014

 

 

 

82,707

 

 

 

—

 

 

 

82,707

 

Public street and highway lighting

 

 

6,604

 

 

 

198

 

 

 

6,802

 

 

 

5,940

 

 

 

192

 

 

 

6,132

 

Total retail revenue

 

 

722,309

 

 

 

35,163

 

 

 

757,472

 

 

 

646,194

 

 

 

34,934

 

 

 

681,128

 

Transmission

 

 

28,380

 

 

 

—

 

 

 

28,380

 

 

 

24,143

 

 

 

—

 

 

 

24,143

 

Other revenue from contracts with
   customers

 

 

32,457

 

 

 

—

 

 

 

32,457

 

 

 

33,580

 

 

 

—

 

 

 

33,580

 

Total electric revenue from contracts
   with customers

 

$

783,146

 

 

$

35,163

 

 

$

818,309

 

 

$

703,917

 

 

$

34,934

 

 

$

738,851

 

 

The following table disaggregates revenue from contracts with customers associated with the Company's natural gas operations for the three and nine months ended September 30 (dollars in thousands):

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

Avista Utilities

 

 

Avista Utilities

 

 

Avista Utilities

 

 

Avista Utilities

 

NATURAL GAS OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from contracts with customers

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

30,285

 

 

$

29,372

 

 

$

217,682

 

 

$

218,212

 

Commercial

 

 

17,203

 

 

 

15,381

 

 

 

114,495

 

 

 

113,183

 

Industrial and interruptible

 

 

2,720

 

 

 

3,480

 

 

 

9,880

 

 

 

13,136

 

Total retail revenue

 

 

50,208

 

 

 

48,233

 

 

 

342,057

 

 

 

344,531

 

Transportation

 

 

2,432

 

 

 

1,866

 

 

 

7,504

 

 

 

6,058

 

Other revenue from contracts with customers

 

 

1,406

 

 

 

1,406

 

 

 

4,219

 

 

 

4,219

 

Total natural gas revenue from contracts with customers

 

$

54,046

 

 

$

51,505

 

 

$

353,780

 

 

$

354,808